Massachusetts Takes Aim at Red Tape

By

Jennifer Levitz

Updated March 4, 2012 11:59 pm ET

BOSTON—Under Massachusetts regulations, a hair salon owner who wants to sell her shop to an employee must first temporarily close down. A funeral director can't hire a part-time apprentice—only full-time is allowed. The state's legal size for a sea clam differs from what federal requirements specify.

These and other "nuisance" regulations, as many businesses describe them, are coming under scrutiny by Gov. Deval Patrick, who on Monday is expected to announce that he's tossing or tweaking 150 requirements—pertaining to everything from sea bass to sewer lines—that get in the way of doing business.

Massachusetts Gov. Deval Patrick
Associated Press

The governor, a second-term Democrat in a left-leaning state that has a reputation, fair or not, for being heavy handed with the red tape, also is reviewing some 800 regulations across 60 state agencies.

The governor will require that no new regulation be approved without completion of a "small business impact" statement answering 20 questions, such as, "Is this likely to encourage or deter the formation of business?Who did you consult from the small business community to come to this conclusion?"

Mr. Patrick's administration has been working on the initiative for months, launching a systematic review of regulations in October.

"Unnecessary paperwork or duplicative reporting is a drain on everybody, on a business trying to make a payroll and on you, dealing with shrinking resources," Mr. Patrick said in a video he filmed Fridaythat will be sent to thousands of state employees Monday. "Let's focus on what's necessary and stop doing what's not."

Last year, the Obama administration launched a government-wide review of business regulations to remove ones impeding growth. The final plan called for federal agencies to scale back hundreds of regulations, though business groups criticized the effort as insufficient, arguing it targeted minor regulations without tackling the overall regulatory burden on business.

Massachusetts still faces obstacles for businesses, such as high costs for unemployment insurance and high energy costs, said Bill Vernon, the state director of the National Federation of Independent Business, a right-leaning group that represents small businesses. "It's a high cost state," he said. But the state's systematic review of regulations and policies for new regulations appears unusual and is also unexpected for the state, he said. Mr. Vernon said he met with Mr. Patrick's staff about the overhaul, and said the state is targeting rules that can "absolutely" be roadblocks to small mom-and-pop operations.

"Having seen the results of the first slice, we're encouraged," he said."I think they'll be making small business owners lives simpler," he said.

Massachusetts ranked 24th among U.S. states in overall business tax climate in fiscal year 2012, an improvement over a ranking of 28th the year before, according to the annual State Business Tax Climate index released last month by the non-partisan Tax Foundation in Washington.

The state's latest unemployment rate is 6.9%, below the 8.3% for the nation.

"We're certainly aware that there is an external reputation outside of Massachusetts that maybe we're heavily regulated, and that's bad for business," said April Anderson Lamoureux, the state's assistant secretary for economic development.

"We don't think that's always the case, but if people are criticizing us for our regulatory climate, Gov. Patrick said, 'Well, let's figure it out, let's change that perception.'"

It can be tricky for states to rescind regulations because some of them provide a social benefit, said Michael Greenstone, a professor of economics at the Massachusetts Institute of Technology.

But Ms. Lamoureux said that most of the changes so far are "no-brainer reasonable solutions that aren't reducing the standards of care or environmental protection."

The review found scores of "duplicative" and "unwieldy" requirements, she said. It had a daily and weekly allowable maximum commercial catch for sea bass, for example, so a great day of fishing "could be illegal in Massachusetts even though you were within your weekly limit," she said. The state is scrapping the daily limit.

Currently, businesses that want to get a sewer connection must secure both a local permit and state permit. The state will now defer to municipalities to make the decision, losing state permit fees as revenue but freeing up that staff to do other projects.

Salons that wanted to transfer ownership to an employee had to close—while paperwork was processed—before reopening under the new owner, Mr. Patrick said in an interview, shaking his head, "I don't think anyone even knew why. We don't need stuff like that, that interferes with a small business person just trying to make a way."

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